The archived blog of the Project On Government Oversight (POGO).

Jul 25, 2012

No Mention of Contractors, But Federal and Private Pay Differences Depend on Methodologies

From the GAO report Results of Studies on Federal Pay Varied Due to Differing Methodologies

By SCOTT AMEY

Yesterday, the Government Accountability Office (GAO) released a report entitled Results of Studies on Federal Pay Varied Due to Differing Methodologies (GAO-12-564). The report was requested by House Oversight and Government Reform Committee Chairman Darrell Issa and Federal Workforce Subcommittee Chairman Dennis Ross in an effort to learn more about varied findings of federal and private pay gap studies.

The issue of federal vs. private sector pay has been hotly contested, and was the subject of a March 2011 hearing before Chairman Ross’ Subcommittee. Unfortunately, that hearing raised more questions than it answered and GAO was called into to analyze the pay gap issue. The GAO report fails to make any recommendations, but it provides a comprehensive explanation of the legal and practical reality of the federal pay system and why comparisons to the private sector vary in their conclusions about the pay gap. Additionally, GAO analyzed 6 studies, including POGO’s Bad Business report, to better understand the wide variance.

GAO found that the studies used different methodological approaches, methods, and data. That was expected, as we had previously pointed out flaws in the Heritage Foundation 2010 study, which found that “federal employees earn approximately 30 percent to 40 percent more in total compensation (wages and benefits) than comparable private-sector workers.” POGO calculated the federal and private sector compensation gap to be 20 percent, but we emphasized that no one will really know the truth until uniform systems are created and apples-to-apples comparisons are conducted that factor in comparable skills, work experience, education, and other non-pay factors.

That leads me to the overriding concern that I have on the pay gap issue. The debate is important for the limited purpose of complying with the Federal Employee Pay Comparability Act of 1990. However, if the prevailing attitude is, as Heritage has proclaimed (see p. 16), that the private sector is cheaper than the public sector, and therefore we should “Hire More Private Contractors,” then GAO’s time and energy was wasted.

A comparison of federal and private sector pay doesn’t do anything to help contribute to the government’s decisions to insource or outsource work. That debate won’t really end until Congress requests or the White House studies public vs. private vs. contractor total compensation and all associated costs. If we are truly looking to save money, cut inefficiencies, and make the government work better, service contracting should be on the table along with federal hiring and salary freezes, merging agencies, and cutting social and defense programs. While there are relevant policy concerns related to the 2.1 million civilian federal employees (who cost $200 billion in fiscal year 2011), there are more concerns with the unknown number of service contractor employees, who cost about $120 billion more.

Pay comparisons are great, but let’s make sure that they are created with reliable data and used for the right reasons.

Scott Amey is the general counsel for the Project On Government Oversight.

Thank you POGO for continuing to shred a critical light on the topic of contractor compensation which is the very reason that the Department of Defense budget is so large. It is also the reason that the Department of Defense is the greatest source of waste, fraud and abuse in the Federal budget.

Every candidate for national office in 2012 should now be discussing this nation. Political pundits jump all over the various welfare programs that affect our most vulnerable citizens but they ignore the corporate welfare that is a part of the Department of Defense budget.

If we are comparing only the rates paid to outside workers with govt. workers, that's not the whole story. Corporations who provide the outside workers also charge mark-up percentages on payroll,as well as other costs. Unless the cost of the worker is calculated using the corporation's bottom line, the calculation is not valid.